Why Design Can’t be Billed by the Hour

January 16, 2010
by Steve Zelle, Graphic Designer, Ottawa Canada

As a graphic designer, I hear this comment a few times a year — a client is unclear as to why I won’t simply charge them by the hour, sometimes by fifteen-minute increments. I can sympathize. When spending my money, I want to know I am not being gouged and that I am getting what I am paying for. It’s this concept of getting what you are paying for that sometimes needs clarification when discussing logo design.

My creative process typically involves coffee shops, walking, driving and not sleeping. Taking time away from the creative problem is vital to finding a solution. I will catch myself taking a break from working on an identity only to have a sudden jolt of inspiration. It is often these moments away from my desk, times of incubation that are worth every penny a client is billed.

You really can’t force creativity to happen. There are ways to encourage it, and a process is there to help direct it, but, in the end, it has to just happen. So while a project may only take an hour at a desk, I can assure you more time was spent thinking about it.

I think it’s a better idea and more appropriate for clients to understand they are paying for a solution and not for the time associated. A graphic designers’ job is to solve problems. One of these problems is helping clients understand the creative process, and, in turn, the value behind design.

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As someone in the profession Steve I can relate to what you are saying here. The key is ensuring that the client gets value for money. Design is inherently subjective and therefore difficult to place a value on.

In everyday life there are paradigms like paying tradesmen for their time and this by convention is by the hour. I would argue that clients should not only pay hourly rate for time at computer but also for time away from the computer when the designer is in the process of thinking about the design problem. I would also go as far as to say they should be paying for a slice of the 20 years of accumulated experience that ultimately provides them with the quality solution (this can be built into the hourly rate I suppose)

I think it is better all round , for a number of reasons, to charge for the final solution including the whole process and not get bogged down in time spent at the computer.

Selling this to the client is the hard part. Personally I use an approach whereby I can demonstrate a return on their investment using a process of measurement, analytics, a/b testing. Of course my field is web design for which identity design is a small part of a much bigger picture. It would be harder to single out the identity and apportion directly any conversions on a website to that identity alone. When i say conversions I don’t just mean monetary, but any interactions that further the goals created for the website at its induction.

It is definitely a hard sell for some clients. I think in the case of a tradesmen, they bill for the actual time spent on the project (with some rounding up, travel etc) and you can often oversee them. There is no way for a client to know how much time is actually spent on a design project — I could easily spend half or double the amount of time quoted.

I believe the benefit to both the client and the designer when quoting for a solution rather than in hours is that it removes that ‘number’. As a designer I no longer have to think about accomplishing something in a certain number of hours. As a client I know the designer is going to spend the number of hours necessary to achieve an appropriate solution.

Chris,

Thanks for the comment and I can completely see where you are coming from. I would not refuse to give an hourly rate to a client either. It would really be a meaningless number however to meet the request — and I would focus on the solution and not the hours.

Thanks for sharing your opinion on the subject. Tracking time can be very useful to ensure you are making a profit on your work and to quote appropriately for the future. Since I quote for the creative solution and not hours, the actual time spent has no impact on the bill in a positive or negative way. If I found I was continually going over the time I had anticipated, I would consider raising my pricing as well as look at ways of improving my creative process. Thanks again for taking the time to comment.

This reminds me of the oft credited/claimed story of the designer who charged thousands of dollars to fix a corporation’s logo. He walks in, looks at the mark, then adds a single stroke to the logo and it’s PERFECT. Of course the client begins to complain that they shouldn’t be billed the full fee as it only took him 5 minutes. The designer informs them that they weren’t paying for the 5 minutes of time to place the line, they were paying for the twenty years of experience to know WHERE to place the line.

I’m totally into that questioning those days.
Actually it started a bit with school realizing I enjoyed what I did despite the big amount of time I spent on it. Then, it was some abstract problem I delayed for later; I hoped that with more experience I would be more efficient. But it didn’t happened as I expected. I am more and more convinced that each new project bring new challenges. For me it’s like taking a new start each time as you want to go further and try to discover new things.

Now I have to make a living, this is my biggest problem. It’s really hard to fix a minimum fee and I found the only easy way to do it is hourly. Even if you can’t estimate precisely it gives you a kind of guide. And some anxiety when you’re hitting your budget because you haven’t found the idea that makes you feel happy and useful…

Well relax and enjoy without worrying is the best thing. And have comprehensive clients too…

I have gone exclusively to the design by hour price model. I have found that the interactions that I have with all of my clients when I meet them have been far more enjoyable since. Every client that I have charged by the hour has respected my time and work, as well held a higher appreciation of the final product, regardless of quality comparison to by project.

What has been eliminated since I moved from the flat rate customers is the add on this thing too factor. Along with the feeling that they were purchasing something replacable. The flat rate seemed to make design, logos especially, consumable to my customers. It seemed to almost lead to every project feeling like spec work, which as we all know is a very bad direction.

Idealistically I couldn’t agree with you more on the charging for the solution model. I think that it is a wonderful idea, and that is fits the world of design much better than a per hour rate. It just hasn’t worked out for me in the real world with people that don’t already understand what design is and what they’re getting out of it.

For larger projects such as websites where there is a lot of production time, I quote a flat design fee and an hourly production rate. I sometimes financially gain and sometimes lose. The most important thing is arriving at a great solution, and one can never know in advance the toil or ease that will ensue.

I’ve noticed almost the opposite. I started doing fixed-fee the first six or seven years and have switched over to hourly for the last three. I felt trapped that I couldn’t charge more and more as my experience grew in fixed-fee situations.

It’s much easier for me to translate the value of an hour to my experience and skill than to an overall project. I also work towards a budget and manage my time around the investment. So it’s still based on a fixed-fee approach, but is billed hourly.

I also don’t think of the “ideas” as the value I bring. Between the client(s) and I, there’s rarely a lack of ideas, it’s figuring out which ones are worthy and executing them properly.

“Enjoy” — Absolutely key to making any process work for a client and for yourself, regardless of how you bill for it. Best of luck and thanks.

Matt,

I appreciate that billing for a solution does not work for all clients or designers. Glad you have found a way that works for you and that makes your customers happy.

Michael,

Thanks for you comment. I think hourly rates for production make far more sense than for design.

Dan Ritz,

Great to hear a different take on the subject. I agree that ideas are never the issue, but rather finding appropriate ideas that solve the creative problem. Thanks Dan.

Soda and Candy,

Thanks, it’s been great to get different opinions on the subject. More articles on similar topics are coming.

***For those that are not aware, I have another site that discusses the creative process through community driven content including case studies, articles and discussions. Processed Identity can be seen here: http://www.processedidentity.com/

Well said. I personally have never really understood the idea of charging by the hour. If I were to start charging by the hour, either the client would end up getting ripped off or I would produce a below average design compared to my standards.
Design is something so subjective when it comes to “the time it takes” that on a personal level it does not make sense to charge by the hour.

I think this is very true of initial designs – logos, websites, brochures. But I don’t think it applies to maintenance.

For example, I design and build websites and I charge a fixed rate for the projects. I build in clauses in my contract that limit the number of designs I will present before additional fees will apply but this rarely happens.

But I do charge hourly for updates. Updates generally don’t take nearly as much creativity as creating something from scratch.

For example, if a client needs and additional business card layout for a new employee or an additional section for their website (if they don’t have a CMS), I bill by the hour because there isn’t much creativity involved and I have a pretty good idea how long it will take and I can share that with my client before proceeding.

A great deal of my time as a designer is spent not designing. I think this applies to many of us.

As a photographer and designer I struggle with hourly vs per day rate or project basis. There are supposidly calculations that ‘back’ you into a price structure that accounts for all of your business equipment, experience and profit including bills or cost to maintain equipment, insurance etc.

A guy wants a price on shooting a portion of his product out of his retail store so he can use images on a web site, other materials… He wants a good price- you need the money and client recognition, and don’t want to low ball your own industry.

I offer several options and depending on the consultation I have I ‘encourage’ them to go with one that we both can live with and hope they like me and my work.

I will ONLY bill by the hour for design work. I’ve been screwed too many times when I’ve quoted a price for the entire job, only to have the client keep adding to the job after the fact! I charge by the hour and do a good job estimating how much time I will actually spend in the creative process (including lying awake in bed at night).

You hit it right on the head, Steve. Typically, my design process involves taking in the clients information, my research and any other relevant information and just letting it mush around in my head for a day or two. It’s kind of like when you let some types of recipes sit overnight. It takes time for the flavors to meld until the dish becomes what it is supposed to be. I design the same way. Let all the different ideas meld together in different ways and give me new and additional angles from which to view and solve the problem.

I’d be retired now if I had a dime for every time I heard/read someone telling me how long something should take. I’ve even gotten that from some studio managers and it can burn me up if they catch me at the wrong moment. The mantra must be repeated, “Design is not a commodity that can only be measured on the time/quantity scale. It’s not like we’re twisting nuts on to bolts or installing an appliance which can be measures in that way.

Great points. What I’ve come to realize is that I should bill based on the design’s value to the client, rather than the time’s value to me.

If I spend 10 hours on a logo design and charge $50/hr, I’m focusing on what MY time is worth. If I charge a $5000 flat rate, and the logo ends up contributing to making the client’s brand and company a huge success, the logo is worth a lot more than the 10 hours it took me to create it.

This goes back to the idea that we as designers aren’t simply creating beautiful design. We should be giving our clients tools to make them successful and accomplish their goals.

Laurie, that kind of issue can be solved by clearly indicating what you will do for the client on a project and stating that extra charges may apply if the project goes outside the stated parameters. While I usually allow some flexibility, if the client starts asking for a lot of new things, I will let him know that our initial agreement does not cover the new work and I will either issue a revised quote or an addendum that they must agree to before work continues.

Great post and just in time for me. I currently stick with just the development side of the web, and billing by the hour works well, but I plan to branch out into the design field a bit too and was wondering how to best go about pricing it.

Have you ever had the “traditional” sorts of problems with fixed price design such as scope creep? Because there isn’t a specification per se

It is very difficult to put an hourly rate on an idea…even more difficult to put an hourly rate to a solution. There is an old fable about this concept in consulting and it often applies here.

A nuclear power plant suddenly shut down on its own accord. A consultant was urgently called in to figure out what was wrong. The consultant arrived, calmly walked to the center of the plant, walked up to a panel of over 100 buttons–each with a different function for the plant. The consultant hit one button in the middle left side of the panel. The power came on and the consultant handed the plant manager a bill for $100,000. The plant manager said “that is ridiculous, you were only here for 5 minutes.” The consultant ripped up the bill and wrote out a new one. It read $1 for 5 -minute site visit, $99,999 for knowing which button to push.

In design our challenge is to demonstrate to clients they pay us to know which buttons to push. The more we know and better we are, the faster we create the solution. So the more experienced you are the less effective hourly rates are.

But it is also important to define the scope of your work and be proactive in managing and re-quoting changes in scope. Nothing keeps scope creep in check better than work order change estimates.

I think it also depends on the kind of clients you are working for. Right now, many of clients are small business or individuals running their one-man business and a lot of them just don’t get that design (I do web design) doesn’t happen magically and on cue.
They are caught in their traditional way of thinking – “If I deliver my specs to the designer today, she can deliver the results tomorrow.”
I personally gave up explaining what you mentioned in your article: that it’s the time away from the desk and computer that also counts and sometimes provides the very solution they were expecting. I got stares and sometimes even unwillingness to pay the bill when I explained the price to them.
So, today, out of sheer necessity I charge by the hour and and list all the tiny steps as accomplished tasks. To someone from inside the design business it might look funny, but to customers who don’t know xxx about design I at least don’t have to justify myself anymore.

I guess it depends on project / nature of work. Also, the logic that you are paying for 25 years of experience also does not cut. There are professionals with 5 years experience who can do much better than people with 20 years experience.

The hourly rate can be varied based on your experience. For example, attorneys charge anywhere from $150 to $700 per hour! Also, you can think of a minimum fee and then charge based on hourly rate if enhancements are required.

This is the reason why (real) consultants go for profit / revenue sharing. Obviously this concept cannot be applied in every scenario.

Another point of view: if your clients knows you and you have established trust in the past, don’t mind charging on hourly basis. Otherwise they would prefer a flat rate.

Think of Hollywood celebrities and technicians. Each carry a price tag not necessarily based on their ‘saleability’ and not by years of experience.

Hence we got to flexible and devise pricing rules mechanism based on the client, nature of work, volume of work, etc. My two cents!

After devoting the last twenty years of my life to design in my own studio, boutique shops and large agencies around the globe, I’ve seen both methods implemented.

I’m at a point in my career where I’ve picked up an uncanny skill to be able to figure time required for designs large and small to a high degree of accuracy and know what to charge. Then again, my estimates have been frequently ignored so that a quote will go out lower than needed so that “we can secure the job.” Many times at some cost later to us, I might add.

I now far prefer a set fee for work; but what constitutes the work needs to be clearly defined for a client. There has to be some set boundary at which point a client needs to be charged (hourly) for work above and beyond the scope of the stated/agreed upon brief.

I think for everyone this will be different. Some shops will need to, or want to, meticulously track time spent versus income for every job … we all have seen those places where designers fill in time sheets and are expected to be 70 or 80% “billable.”

Others have a better understanding of what it is we do and allow for creativity and the process to take its course. In the end, as long as the shop remains profitable, can anyone say which is right or wrong?

Thanks to everyone for taking the time to leave a comment. I really appreciate seeing your opinions on the subject.

I personally only design visual identities/logos, this means that I have very little production time. Almost the entire creative process from research to design is spent problem solving.

The timeframe for any given identity project is the result of a wide number of factors. The most influential factor is my ability to be creative on any given day. I don’t bill more for days that I am more creative or bill less for the days that I am in a slump. My clients pay me to work at a problem until I develop an appropriate solution. I feel that neither the variance in time nor the reasons behind it, affect the value I provide in the end.

No doubt other ways of billing work for other designers and clients as seen in the above comments. I have billed by the hour in the past and have discovered it doesn’t work as well for me, or the people I choose to work with.

One vital step regardless of how you bill, is our responsibility to provide clarity for the client regarding project scope. Changes and additional charges can get out of hand very quickly and knowing upfront what is included is essential for a good relationship. (I happen to have a new article on Processed Identity http://processedidentity.com/article/revisions-redesigns-and-the-creative-process/ about this subject)

I don’t believe one way of billing is right or wrong as long as designers are getting paid appropriately and are focused on delivering the best they can for their clients.

Good article with great comments!! This is definitely a tough issue for many design/development firms and one we have wrestled with on several occasions. I agree with many of the comments given and we tend to utilize a hybrid approach with a shift towards full hourly. We give project pricing based on hourly estimates, track our time and ultimately provide final billing based on hours. Luckily, we are very good at estimating most projects, but we do have to eat some stuff every now and then.

I’ve so far been charging clients a flat rate, depending on the type of project (logo, web, etc), but I’m thinking of tweaking this into a two-step process:
1) A flat fee for the initial work, plus x number of edits
2) A rather-high hourly-fee for edits after that, to discourage clients from asking for frivolous changes or scenarios like “show me edits A, B, and C and we’ll choose later which one is the final version…”

I just wanted to add that charging by the hour stops me from feeling exasperated with my clients when they start asking me for another thing….and another thing…that was not part of the original brief.

I want to feel that my work is valued by the client and, more importantly, I want to maintain a good relationship with that client. It’s hard to maintain a good relationship with them when you feel taken advantage of at every turn because you are not being paid for the inconvenience of it.

That said, I will offer people a flat fee if they are just looking for something Good Enough and not Perfect. If I know how much I’m going to be paid for a job, then it becomes MY choice whether I want to spend a few more unpaid hours making sure the design is as tight as I want it to be?

Great article. I run a small shop with three designers, including myself. Initially, I struggled with how to bill fairly. I realized that me and my designers worked at somewhat different paces and sometimes the creative process just takes longer. I couldn’t risk my clients requesting a favorite designer based on how few hours they billed -whether they were more experienced or just having an “on” kind of day. I settled on a pricing scheme that combines per page rates and per project rates. We only revert to hourly rates when billing edits after the first proof stage. It has worked pretty well.

I usually give estimates that are broken down into sections of hours but this is just a rough ball park. I think that being very open with our clients about our process and how we work will help clients see past hours and numbers.

It depends. If you are a machine operator, and the client is going to pay for the time to sit down with you and create the design alongside you directing it every step of the way.

Then of course. Charge by the hour.

Otherwise, they are paying for project work. How much time you spend creating something is none of their business really.

Same goes for people buying designer label clothing. You don’t pay for the time it took to manufacturer, design and ship. You pay for what you think it’s worth. That could be a bad analogy, but it sort of follows the same line of thought.

Just don’t let people sit down and psh you around like a machine operator if they have already agreed to a fixed price. (Some people will really push it to the limits. It’s hard to figure out who is who. Some won’t reveal who they are until they realize what “they” can do.)

Couldn’t agree more, but clients usually don’t get the design process. If you’re luvky they appreciate the creativity, or it can mean back to the drawing board.
Keeping them in the loop helps.
Remind mr not to pay my carpentrr by the hour too, i like solutions there also 🙂

A design firm, I worked before, charged fixed fee after an initial interview with a potential client. However, after the project kicks off, if the client’s demands and requests are beyond the quote, we talk and agreed with the additional fee. I think designers need own working hours estimation to be able to tell them in terms of the client’s requests. That will become a price.

Now I have been working in overseas. In here, every client asks my hourly rate. I was surprised the first time. They ask me before they tell me what they want. I think they can judge by the rate not by the quality.

If I were a client side, I would have a budget for the project. I wouldn’t be able to afford to pay designers and programmers who takes time where ever they work for my project. More importantly, I have to trust them.

Last time, I had to ask a programmer to do some work. I told my budget and he estimated his work then he accepted it. This means I feel safe.

None of client has unlimited budget for asking you to work. At least you have to tell them your work estimation time and explain the process of the project to the client. There should be some kinds of agreement in both side to sign and be honest each other to communicate.

If you know the deadline and what to do, you know how much you should charge them.

The long and short of my research is this: creative work cannot be sliced and diced by the hour, much less by the minute because that is not the way time is cognitively experienced (not news to anyone). The REAL reason larger interactive design agencies (my area of study) do this kind of tracking is to imbue a sense of “time thrift” among employees.

People who are rated on “utilization rates” are often told that they must have a minimum amount of their labour sold to a client. This, after they’ve already sold their labour to their employer. In this sense, billing by the hour is super-commodification of labour.

In short, I don’t recommend it, mostly because the technology used to track time is so crazy FrankenTime that it makes real life and real creativity disappear.

So true. It also really depends on what the client ‘is use to’. When we have clients who are familiar with design and creative processes its easier to explain how you use your time. If the client is really conservative it can be difficult, but –as a designer– I use my creativity to solve that problem. I try to take the client by the hand and explain him/her what I do and what my steps are in a creative process. Mostly it is build on trust.

I agree and the bigger concern is that speed becomes valued over our ability to solve creative problems.

Niki,

Thanks. Being open and transparent in how/why you price the way you do is a great way to build trust with a client. Not only do they begin to understand the process, but their trust fosters better results.

Thanks. I understand how projects can go off track and result in the designer feeling they are being taken advantage of. It can be difficult in the middle of the project to try and correct this and so it is essential to set expectations at the beginning regardless of how we bill. Another plug for my article above.

James, TZcreative, M, Thanks for contributing — it is appreciated.

William,

Thanks, Great comment. I think it is sometime felt by designers that clients should come to us with a better understanding of what we do. There are plenty of professions that I would not know what to expect the first time engaging in their services. I feel (like you) that it is a part of each project I accept, to gain the understanding and trust necessary to do the job. Building understanding and trust can sometimes be insurmountable and those are the clients I turn away.

Sam,

I really enjoyed your take and unique perspective on the subject and for pointing me towards your blog. http://agencytime.wordpress.com/ (I updated the link in your post as there was a small typo).

I tend to do a mix of both – I quote a flat fee, but convert it roughly to ‘hours’ for the client and for my own time management.

I’ve found that putting a specific number of hours next to a project stage helps the client judge its value, rather than the price I’m asking. x hours on Information Architecture is a lot easier to stomach than £x; after all which client would want to skimp on important parts of their project?

I’m just a student doing freelance work though; I’m sure this will change as I grow my confidence in dealing with clients.

I do web design & development, and do not apply hourly charges on either side of the project. I’ve done it before, and it simply backfires.

With design work this is easier to visualize. With development there is also a lot of time put into it that clients tend to not understand. Writing good JavaScript or good PHP takes some clever thinking as well, and you will often find yourself at a coffee shop daydreaming in script.

Good article, I rarely use by the hour pricing, because I tend to work very fast, especially when it comes to the xhtml css part or wordpress integrating, charging by the hour wouldnt make me anywhere near as much, because my hourly productivity would be very high.

I fully agree, but don’t think this only applies to design. As a web developer, I often come up with solutions to complex problems laying in bed at night, or driving, or eating, etc. Just as designers draw inspiration from all over, developers are constantly thinking about how to solve problems, and the solutions often come at times when we are doing something completely irrelevant.

I am a web developer also and I usually solve problems when driving. My wife is always yelling because I miss my turn. Something about being away from the problem causes me to see the problem and the solution clearly.

Yes indeed the same principle does indeed apply to developers. Key here is design thinking, which is a process that involves coming up with a solution to a problem. This can’t be translated into ‘desk time’. It applies to anyone who deals with the indeterminate. Architects, engineers, any designer, developers and indeed marketeers.

First off.. wow so many great comment on this topic because it is always so relevant!

I think that selling your creativity hourly is selling yourself short. Like the diagram illustrates you can not pick, choose or dictate when your brain goes into creative mode.. should i write down the 4min on the train that i thought about the project or the 2 hour that i was inspired while visiting the museum?? clients will never go for that…

We just figure out what it the best way to incorporate our knowledge, skill & time to make a flat rate that is competitive and fair to all involved. ( I have figure out a base hourly raer to help me figure our that number) but once that is revealed to the clint they always want to nickle and dime you..

they really do not understand that just becasue it took you 1hr to finish the solution, doesn’t mean it didn’t take you 10-20 years to be that good! They need to pay for that too.

I always think back to this story i heard about Picasso and the napkin sketch:

The story goes that Picasso was sitting in a Paris café when an admirer approached and asked if he would do a quick sketch on a paper napkin. Picasso politely agreed, swiftly executed the work, and handed back the napkin — but not before asking for a rather significant amount of money(I heard somewhere int he range of $40k). The admirer was shocked: “How can you ask for so much? It took you a minute to draw this!” “No”, Picasso replied, “It took me 40 years”… Exactly!

The point of design is not how it makes your client feel, but how it makes your client’s customers feel.

Realistically, even if I only spend 1 minute creating a logo or design, it’s true value is it’s ability to represent my client to their customer in one “impression.” How does it make their customers feel? How does it resonate? Do they understand what my client does? Does it express my client’s “flair” to their target market?

What really matters, and this is what needs to be stressed to your clients, is how much credibility it creates/maintains for them in customer impressions.

Design is your expression, based both on intrinsic and learned creative, artistic, and marketing ability to turn your client’s imagination into a powerful symbol that is easily recognized and will define their core brand. Hopefully, this brand will become the keystone in many lucrative years ahead for your client and their company.

I have problems charging any flat fee for this service. Frank Mason Robinson is the guy who designed the Coca Cola logo — one of the most recognized designs on the planet. What was his design worth?

Coca Cola
Market Cap: $130B
Sales, 2009: $30B

How well would Coke do if they changed their logo every Year? Every month?

Design is foundational to brand. Substance supports it (product, marketing, service, people, consumer demand, etc). Solid branding and solid substance will create a lasting company, but the image that company decides to project is the only thing that a potential customer sees before a decision. And they do decide, every time.

You only have once chance to make a good first impression. Ask your clients: What is that worth?

Flat fee? No.
Fee per production (each time logo is produced, in any format)? Yes.
%of sales, or company worth? Yes.

This is the correct form of compensation. Just like other copyrighted works — music, books, movies, etc. There needs to be a residual income that we enjoy just like authors, entertainers, and song writers. Our work is exactly the same thing.

(Has anyone convinced their clients to go in for something like this?)

Great graphic. My most “productive” time is when I’m laying in my bed at night before sleep. I also often get ideas when I’m laying down with my kids as part of the putting them to bed ritual. Like others have mentioned, I also come up with solutions in the car (plenty of time to think in slow traffic every day.) Staring at the monitor with my IDE or Photoshop open is not always the best way to come up with a solution.

This is an issue that I struggled with a great deal and I do agree with the theory behind what all the flat raters are advocating. 100% in agreement with the theory – but I’ve found loop-holes in the application of that theory.

You’ve all had that client, that you quote a flat rate for, complete the work as per their instructions, make the minor changes after reviews and then inevitably the completely alter the concept because they had an epiphany or a cousin of their’s suggested it. Now they want the project redone based on their new concept and they’re not willing to pay anything more than the flat rate you quoted.

There are numerous other types of scenarios where you have people trying to take advantage of the flat rate concept… …like the client who doesn’t know exactly what they want and revise and add as the project goes, so you end up with something far larger in scope than you had ever imagined.

Now, don’t get me wrong – the client’s aren’t right here and you’re fully entitled to argue with them, struggle with them and fight hard to ensure you’re getting paid. But, that’s not what I got into this business for. I am not a designer and developer because what I wanted to do was debate with clients about costs.

So here is the solution I propose to all of you – factor in the times you do feel creative. (For me, and a lot of others, driving inspires and solves a lot of dilemmas… …but also, the shower. Early morning showers are code havens for me and I solve a large number of code related issues while showering. Weird I know.) Once I factored that into my daily routine, I was able to justify a rate increase to myself. I essentially add $10 to $15 per hour to what I think I should be charging to cover for all those “off the clock hours” where I find inspiration, ideas and solutions. And to me, it works out fairly well and I find myself content.

I also find that it is much easier to explain this to clients and it prevents them from trying to take advantage of me by under-stating the scope of a project or design.

If they inquire about the hourly rate, I explain that I’ve invested 10+ years of my time learning the best possible ways to give them exactly what they want, to the best of my ability and as expeditiously as possible. They have a hard time arguing with it.

Wow, I was thinking about what my comment would be and then got to tdjukic’s comment. It’s virtually identical to my thoughts.

I spent several years using the flat fee model and essentially lost money every project – meaning that I would estimate a certain amount of time toward a project and agree to that fee, but by the time the project was finished I’d have spent many more hours on it.

I’ve never worked in the sort of environment where people were willing to pay for the value of the work based on how it makes people feel and such. My experience has been more small to medium businesses that wouldn’t be willing to pay $4 million because that’s what a logo is “worth.” I’m not complaining, because I like the scale of projects, but I’d be willing to be a lot of designers are in the same boat.

Lately I switched to an hourly-based pricing system (thanks to the pricing philosophies of Forty where I work) and I’m so much happier.

When a client asks for a change to the scope that they were originally so sure about, it’s no problem. I just remind them it will be x more hours and let them decide if it’s worth it.

My thought is that if you spend time working out a challenge while not at your desk, simply record that time and charge for it. Just make sure your rate reflects the experience you bring to the project.

Thanks for all the comments and opinions. Really great to have so many people share how they deal with this subject. There are too many comments for me to reply to each individually without repeating what I have already said but Amy’s comments brought up a question:

If you are choosing to bill by the hour in part so can recover any extra time spent beyond the quote, do you offer your client a discount if you are able to complete the project in less time? If not then would you agree that you are still billing for a solution — you are just putting a cap on the amount of time you will spend. I think here is where I differ in that I would not change any extra to develop an appropriate solution, regardless of the time it takes. I think we all have some idea of the value we provide and none of us would bill a few hours for a logo even if by some stroke of fortune we could complete it in that timeframe as it is the solution we are offering not the time to get there.

Interesting question – do we discount if we complete the project in less time? I don’t consider it a discount, but rather the client pays for the time invested. So if that’s fewer hours than originally estimated, the invoice reflects that.

If I were to complete a logo in a few hours, I don’t have a problem charging for that time. I’m not sure how I’d go about deciding what a logo “should” be worth. Mainly it comes down to client budgets and having a lot of conversation about what they’re looking for. If they can only pay for a 5-hour logo, then the product reflects that and they have to be OK with that.

I think it’s a common thought: If I design a logo in an hour, and only charge an hour of time, wouldn’t I be getting ripped off? But there’s so much more that goes along with a logo design than just creating a picture – research, competitor analysis, thought, sketching, trial and error. And it’s going to be experienced in some kind of context, and showing other branding elements is part of the project, which takes time to work through. It’s my opinion that if a logo is finished in an hour, the designer hasn’t done his or her job.

I am curious to hear what other people charge for designs. It seems like it varies wildly by region. In Phoenix, it’s tough to get people to pay the same fees that L.A. or New York get…

I brought up the “logo in a few hours” idea because I was recently approached through Processed Identity (my other site) by a very talented designer about a logo she designed in an hour or two. I think she would agree that in addition to the design time, the logo would still need to go through all the process check points to make sure it is the right solution for her client.

I don’t believe reduced hours equals a reduction in the value of her solution, just as having to put in more hours due to a rough couple of non-creative days increases the value. The value of the solution is independent of the time spent.

How to determine value? I don’t know of any good designers that share their pricing — including me. My pricing is determined by my experience and abilities, the project specifics and what the market can handle. I think you are correct in saying location plays a factor in what clients will pay as well.

We’re selling a package: expertise, skills, research, pondering, creativity, and a desire to share same with our clients to provide them with a solution. As stated and restated here, some very important parts of the process have nothing to do with our desk, computer, or even our office. Great post! Thanks.

Hear hear, for copywriters too! It would be lovely if the words would flow on command, but sometimes they just don’t. And I could be working on one project then experience a brainwave for another. Should I then stop the imaginary clock for the first, crank it up for the second and keep notes about 3 minutes here, 8 minutes there? It’s really not possible nor practical. The best solution for me is to have an hourly rate in mind (derived from the complexity of the job, my familiarity with the business, the volume of wording involved and other factors), try to estimate a number of hours that it would take me to complete the job, and multiply the two elements. Work follows me on to the treadmill, through the supermarket, in traffic and at the movies. Best I start billing for all of those billable minutes! 🙂

I haven’t gotten to the point where I charge for my designs but your point is very clear and I think should be used with all designers including my-self. I sit at my desk all the time but sitting at your desk just make you more aggravated that you can’t get an idea but just sitting and watching the game will spark and idea in you and in-turn help you create a smoother, clearer design that most people like and will want to use.

If I drew out the image at the top, mine would have a whole lot more Dark Grey and a whole lot less red.

I see a lot of good comments, I think you need to charge hourly for production. I have many clients that want a website overhall halfway through production of the original, or come back for extra rounds of change with a flat fee. Hourly help curb that need to keep changing. When it comes to concept I charge a flat fee and give my self ample time to mill around ideas. I try to keep a field notes book and a pen on me for that moment the idea slaps me in the face. But charging for me to sit down and draw you a logo in 3 hours will get you a logo I drew in 3 hours.

I usually try to get clients to appreciate the benefit of a quote rather than time estimate.

Once, a new big client asked for a price which I estimated at around $10,000. He was so surprised he asked me to do it at an hourly basis. The job came in at $23,000, mostly due to all his changes. And changes. And changes. So I now have mixed feelings about hourly vs. quote.

I definitely generate a lot of ideas for clients while thinking of ideas for personal project. All the time I spent in the Starbucks of Barnes & Nobles, flipping through a stack of design magazines and books taller than I am, looking for ideas for me, but jotting down ideas for them. Or vice verse. I wouldn’t know where to begin trying to figure out how to charge that hourly.

Ah the age long issue of the value of your time. We in design will always in some way be a slave to our work if you think in these terms. If we could afford to, we should develop our own work and just sell it. But first you must be recognized to incite demand to be able to even charge $40K for a napkin sketch. Most great designers wold only be able to get the real fees they deserve after they are dead, for that is when they are truly in demand, as the supply has now been extinguished (except for may Michael Jackson). I hope that I will someday be compensated for the true time on something before I die.

Great discussion here. One way around the flat rate fee and the creep in scope is to give clients a fork in pricing. So first outline the scope, including deliverables and number/types of revisions + what the hourly rate is for additional revision, then specify a bottom number and a top number for your fat rate (say $10-12,000).

Most of us are not very good at accurately estimating the number of hours required to get a project completed to everyone’s satisfaction. Making the client aware of the variables at the outset (such as the number of time changes come one at a time instead of grouped in a single email), allows them to feel comfortable with the numbers whilst giving you some leeway in the hours spent/remuneration ratio. It’s not infallible but it helps.

Agree totally with Isabelle. I’d add that it important to remember what really motivates clients. When we understand WHY they tend to turn to hourly rate solution when dealing with creative services we can redirect. The hourly rate is really a symptom of fear.

In my experience, what mid-level clients really want is safety and leverage. For better or worse, the final goal of the project (increased sales, traffic, mind share etc…) are not the issues our direct contact is primarily concerned with. Usually, they are being evaluated on delivering a project on time and within budget. Strategy is their bosses problem.

Clients want reassurance that there is a process that accurately defines what the project is and how much it will cost in a way they can EXPLAIN IT TO THEIR BOSS. Also, they want to know what their role is and what their leverage is in getting the most out of us.

During the planning/proposal phase I try to get them thinking about a project in these broad terms:

1. Time
2. Scope
3. Budget.

I tell the client they can pick any two. For example:

huge scope + tiny Budget = 10 year delivery date.

This is really just retorical rather than an actual choice. The fact is that they ALWAYS have a budget and deadline. The soft-spot is ALWAYS scope.

So, proposed scope must fall within what we know (or guess) the budget to be and what the timetable is. Then we can put limits and costs associated with deviation from scope into our agreement. For example:

Website XYZ proposal will put a limit on the number of pages or design templates. Say no more than 5 templates and 20 pages. Changes to the IA are billed hourly (or by the page sometimes). What makes a “page” is another argument. Design revs are limited (three generally)

Often problems with time line are the result of client delays approving designs or delivering content such as copy. Some basic rules need to be established upfront – not just for changes in deliverable dates but also the time it will take once they do get us the content – touchy subject – They don’t want to hear “But I’m really busy with other work now” Best to cover this upfront.

If the proposal is clear on scope and time and financial penalties are clear and agreed upon budget should manage itself.

Then it is just a matter of screwing up a bunch of times estimating how long it will take to really do the work. After a while you get really good at coming up with a flat fee number – And hopefully a good argument for why they should agree to pay it.

Isabelle, you suggest a very fair and transparent approach that should work for most designers and clients. Thanks — no doubt many readers will adopt this.

Mark, like Isabelle, your approach is based on consideration and fairness to both parties. Nice of you to share it.

Danielle, Yes!

Benjamin, Thanks for the kind words.

Thanks to everyone else for all the great comments. This post has become a great source for opinions on the subject of costing projects, with the comments providing even more value than my original post. Keep the opinions coming.

Good points, and relevant issues raised by many. We usually (all things aren’t set in stone) bill on a project basis, and relegate things such as production and revisions beyond original, clearly defined scope at an hourly rate. I’ve been at this for nearly 20 years, so I think I have a good handle on how long it will take to achieve stated goals. In my opinion, the most important thing to get right is the creative brief. Have clients complete briefs. Have clients create briefs for all projects, and be willing to walk away if they won’t complete the brief. I also require (but don’t always adhere to it) that clients state an approximate budget or range in the brief.

We make our project estimates based on info gleaned in the brief, initial meetings, and the first follow-up meeting. One thing we always wonder about, but haven’t had a good answer for is value of the work to the client.

Would you say a logo for XYZ company that aims to or currently brings in one million in annual sales should be the same project fee as a logo for ABC company that aims to or currently brings in $40 million?

Its one thing to argue the Coke logo should in some small part share responsibility for the $130b market cap and $30+b in annual revenue. But, good logos do not make good companies. And, great logos certainly don’t make great companies. There’s much more to success than solving the identity and brand problem.

I argue that proper attention to branding, a well developed logo, and thoughtful, adaptable and comprehensive brand guidelines can help companies in many ways. But, I would never argue that the logo is the reason for a client’s success. Maybe I’m not giving our profession enough credit. I’m eager to learn what others think. Also very interested to learn if you think the creative fee should be the same regardless of the size of the company?

To me, its all about scope. Small companies require a similar amount of our time invested in research, discovery, initial client meetings, brainstorming, scketching, design, production and presentation as large companies. The difference is in roll out and implementation. IF we design a logo, and then need to implement it and write guidelines for implementation across a fleet of 12 vehicles, 40 hard hats, three sets of exterior signage, a website and print materials. That’s much less labor intensive than rolling out a logo and brand identity across a fleet of 400 vehicles, 4,000 hard hats, dozens of signs, corporate trade show booths, and print collateral in multiple languages.

The production portion of that equation is very easy to target and account for. I also think the creative portion of it can be fairly estimated. The unresolved question lies in the value of the logo (or any design project) to the client. Should we charge more based on value? Should we charge more because one firm has annual sales of $100m, where another firm only has sales of $10m?

You can usually tell if a logo/design was created on an hourly basis – at least some times. I mean the type where the design appears to be more of an arrangement of graphics as opposed to an evolution of a strong intelligent concept.

Design service is an idea-based solution, in which there is no one answer. If you are a purist, and work from inspiration to perfection, it’s simply impossible to quantify the process.

How I handle this with a client is by giving safe time windows which I could only come to after years of getting to know my ‘process’ better and having enough confidence to say I need more time without the regret of letting the client down. Ideally, if there is no impending deadline for the eureka moment, the process following becomes easier to measure and bill, if that is your method.

In the end, I came to a flat, segmented fee. And still, sometimes you win, sometimes you loose but the problem is always solved.

If you can have your client understand that the design process is like baby making, then you both win 😀

This has always been one of the hardest topics to get across to a client. I look at it like this. You give me the budget and then we can talk about what can be done within that price point.
This may seem like a crazy idea but it has helped me to form lasting relationships with my clients. This way they feel more in control of their own spending and thus more inclined to repeat business.

Great post. I think the heart of the problem lies in understanding that you ultimately aren’t buying a hard product. In a sense, what clients pay for is the expertise, strategy and experience of the designer. It can be very confusing especially with logo design, because the item a client seems to be purchasing is simple in appearance. I try to educate prospects by explaining that what you’re buying longevity, flexibility and professional expertise. None of these concepts can be billed by the hour nor would you want to.

I love this quote – “You really can’t force creativity to happen. There are ways to encourage it and a process is there to help direct it, but in the end it has to just happen.” It really ties in with my view that clients who set impossibly short deadlines for a project are really just shooting themselves in the foot. To get the best possible product you need to give your agency enough time to let the ideas marinate.

Wow, a blast from the past! But still, timeless advice. You never know how long each step is going to be when it comes to creativity. I try to figure out a ballpark number for what I would make hourly on a project but if I go over or under, then it’s all gravy. There’s nothing worse than handing in your hours to a client and thinking that they might say “It took you THAT long?” I’d rather have the freedom to take as much (or as little) time as I need.

I bill by the project, but in the past have had to bill hourly on occasion for certain projects. These projects have always been problematic. The clients have a certain budget in mind, but don’t reveal it and then when the hours add up in the end they are shocked. This is even after I’ve keep them aware of where we are at hourly throughout the project because I hate the sticker shock reaction the hourly pricing gets in the end. I find that billing per project is so much better, the client is aware of all costs up front and you can both work on the project without the client being stressed or pressured about the hours accumulating. That’s just not how design works, we are not on a time clock to create.

Designers can not be paid hourly. As said in main article, some tasks can be solved in few minutes at desk/PC, because most of the times it may take several hours (or days) to right solution be found out!

You make an excellent point. I’m a new designer and have been billing by the hour, but I have found that it’s difficult explaining to a client why 10 billable hours take me two weeks to do. It’s all that idea-percolating time that I don’t know how to (or feel comfortable in) charging for.

Billing by the project instead makes so much better sense because I’d be factoring in that time spent on a walk when the inspiration just comes to me without having to figure out how to bill a client for a walk I took. It’s true that creativity can’t be rushed or forced, and it’s been difficult for me to wrap my head around how to accurately bill for that nebulous percolating time, but I think you’ve hit it spot on. Thank you for the tip!